In the new issue of Regulation, economist Pierre Lemieux argues that the recent oil price decline is at least partly the result of increased supply from the extraction of shale oil. The increased supply allows the economy to produce more goods, which benefits some people, if not all of them. Thus, contrary to some commentary in the press, cheaper oil prices cannot harm the economy as a whole.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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A recent study by economists Alberto Alesina, Dorian Carloni, and Giampaolo Leece looked at 19 OECD countries from 1975 to 2008 and found no evidence that “governments which quickly reduce budget deficits are systematically voted out office.” Therefore, the authors conclude that governments can “decisively” reduce deficits and be returned to office by voters.

A particularly interesting finding is that only 20 percent of the governments that reduced deficits by cutting spending were subsequently voted out of office. In contrast, 56 percent of governments that reduced deficits by increased taxes were given the boot.

The findings are good news for the large group of incoming members of Congress who promised to cut spending during the campaign.

The authors ask, “If it is the case that certain types of fiscal adjustments are not necessarily costly in terms of lost output or lost votes, why are they often delayed and politicians reluctant to implement them?”

One possible reason they suggest makes the most sense:

Certain constituencies may be able to block adjustments to continue receiving rents from government spending because they have enough political energy (time, organization, money). This is sometimes referred to as an issue of diffuse benefits and concentrated costs. For example, in some cases strikes of public-sector employees may create serious disruptions. Pensioners lobbies may be able to persuade politicians not to touch their pension systems even when future generations will suffer the costs of delayed reforms. Lobbyists for certain protected sectors use campaign contributions for continued protection.

Policymakers in Washington are surrounded by doting staffers, political operatives, and persistent lobbyists representing countless special interests. The result is an endless stream of feedback telling policymakers to SPEND! Or, as is currently more likely the case, DON’T CUT! Many politicians learn to enjoy the warm feelings (and campaign support) that come with delivering the taxpayer goods to particular interests, while those who would actually like to cut spending don’t make any friends.

The media often doesn’t help matters.

Consider how many journalists tend to portray the subject of spending cuts. They describe proposed cuts as “draconian” and modest trims as “slashing” spending. Instead of considering the cost to taxpayers of a program or the possible alternatives to government programs, journalists just think of cuts as “painful.”

One way to puncture a hole in the Beltway spending echo-chamber would be for congressional committees to spend more time listening to witnesses who don’t want more government spending. In a Cato Policy Analysis, former Yale professor James Payne surveyed 14 congressional committee hearings. He found that “in those 14 hearings, 1,014 witnesses appeared to argue in favor of programs and only 7 spoke against them, an imbalance of 145 to 1.”

There’s a lot of talk coming from House Republicans about “changing the culture” in the appropriations committee and elsewhere. A good start would be for the committees to start hearing more from the “diffuse” taxpayers footing the bill, and less from the concentrated beneficiaries. Perhaps then more policymakers will come to realize that pushing spending cuts isn’t so scary after all.

Tea Partiers are celebrating the biggest swing against the incumbent party in the House of Representatives since 1938.

It always feels great to win an election. But the real job for fiscal conservatives and smaller-government advocates starts now.

The usual pattern is that after the election the voters and the activists go back to their normal lives, but the organized interests redouble their efforts to influence policymakers. That’s part of concentrated benefits and diffuse costs, which we talk a lot about here. People who want something from government organize PACs, hire lobbyists, fly to Washington, make phone calls, make political contributions, take senators to dinner, and otherwise “know no rest by day or night” (in the words of economist Vilfredo Pareto) in their effort to get their hands on taxpayers’ money. Meanwhile, it’s not in the interest of any taxpayer to become informed and seek to exert influence on each particular spending bill.

Tea Partiers must change that pattern. They must keep up the pressure on Congress and state legislators. They must demand actual performance, not just promises. And they must also seek to change the attitudes of the American people. It’s not enough to favor small government in principle; more voters have to agree to give up their own subsidies and benefits. There’s some evidence that Tea Partiers know this. As Jonathan Rauch wrote recently in National Journal:

But, tea partiers say, if you think moving votes and passing bills are what they are really all about, you have not taken the full measure of their ambition. No, the real point is to change the country’s political culture, bending it back toward the self-reliant, liberty-guarding instincts of the Founders’ era. Winning key congressional seats won’t do that, nor will endorsing candidates. “If you just tell people to vote but you don’t talk about the underlying principles,” [Tea Party Patriots coordinator Jenny Beth] Martin says, “you just have to do it again and again and again, in every election.”

… One hears again, there, echoes of leftist movements. Raise consciousness. Change hearts, not just votes. Attack corruption in society, not just on Capitol Hill. In America, right-wing movements have tended to focus on taking over politics, left-wing ones on changing the culture. Like its leftist precursors, the Tea Party Patriots thinks of itself as a social movement, not a political one.

As George Washington said in his first inaugural address, “The preservation of the sacred fire of liberty, and the destiny of the Republican model of Government, are justly considered, perhaps, as deeply, as finally, staked on the experiment entrusted to the hands of the American people.” We have a chance in the next two years to demonstrate that republican government can still work rather than spiraling downward into endless debt and depression.

And of course Congress has a big job facing it, too, especially the newly Republican House. To capitalize on their victory, the Republicans must demonstrate to the voters that they’re serious — finally — about more freedom and less government. They destroyed the Reaganite Republican brand during the Bush years. And it’s harder to rebuild a brand than to destroy it. But the backlash against the Obama-Reid-Pelosi big-government agenda has given them another chance.

House Republicans should keep these goals in mind:

Get serious about spending. Annual federal spending rose by a trillion dollars under President Bush — before the gusher of spending when the financial crisis hit. Bush became the biggest spender since LBJ, but he didn’t hold that title long. Spending is now twice as large as when Bush became president, and annual deficits are over a trillion dollars. This is Greek-style fiscal policy. All Republicans have been promising to get spending under control, but they have adamantly avoided specifics. Now the rubber meets the road. The House of Representatives must find real cuts that will reduce overall spending and lead to a balanced budget. The Cato Institute has produced the gold standard for budget cuts in its full-page newspaper ads, in this analysis of the military budget, and at DownsizingGovernment.org. But there are other lists of cuts from the Heritage Foundation and jointly from the National Taxpayers Union and Ralph Nader’s Public Interest Research Group (PIRG). Or they could just start by cutting out the $1.8 trillion in spending this year that exceeds what we spent the year George W. Bush took office.

Start rolling back the health care overhaul. The voters didn’t like Obamacare when it passed. Contrary to lots of predictions, they still don’t like it. Republicans pledged to repeal it. They should keep their promise to the voters. But of course the Senate and the president aren’t likely to go along with a repeal bill. So the House should refuse to appropriate money to implement the provisions of the bill and prohibit the Department of Health and Human Services from spending any money to implement the worst provisions of the bill, especially the individual mandate.

Stop the looming tax increase. Under current law, taxes on capital gains, dividends, and everyone’s income will rise on January 1. Congress needs to block this looming tax increase, preferably in any lame duck session and otherwise in early January. The prospect of higher taxes will discourage spending and especially investment.

Take a hard look at the wars in Iraq and Afghanistan. We’ve been fighting in Afghanistan for nine years and in Iraq for seven. Newspapers in August featured pictures of American soldiers leaving Iraq and officers proclaiming ”A truly historic end to seven years of war.” But as Patrick Henry said, “Gentlemen may cry ‘Peace! Peace!’ — but there is no peace.” Not as long as we have 50,000 troops in a divided and war-torn land. As for Afghanistan, we long ago removed the Taliban government. It’s time to convene hearings and ask what we expect to accomplish in either country for the further expenditure of men and money.

Take a similar hard look at the war on drugs. To drug warriors, nine years is a blink of an eye. They’ve been at it since 1914. And thanks to their efforts, only 119 million Americans have used illegal drugs, and only 22 million Americans use them at least once a month. Meanwhile, the violence generated by prohibition is wracking our closest neighbor and spilling over the border to the American Southwest. A new Cato study estimates that legalizing drugs would save roughly $41.3 billion per year in government expenditure on enforcement of prohibition. Of these savings, $25.7 billion would accrue to state and local governments, while $15.6 billion would accrue to the federal government. The report also estimates that drug legalization would yield tax revenue of $46.7 billion annually, assuming legal drugs were taxed at rates comparable to those on alcohol and tobacco. If it can’t just end this failed policy, Congress should appoint a blue-ribbon commission to study alternatives to prohibition.

Stand up to the special interests. As noted, the moment the polls close, the organized interest groups descend on the new members of Congress. From PHRMA to farmers, from oil companies to Social Security/Medicare lobbyists, everybody wants to pay off a campaign debt and take a senator to a game at the Verizon Center. Republicans — and Democrats — need to show some republican virtue and resist these organized interest groups. And that includes one of the biggest interest groups: your home district. With trillion-dollar deficits as far as the eye can see, it is a dereliction of duty to say “I’m going to Washington to cut spending and to fund important roads and parks here in my district.” The country’s overriding interest at this point is to reduce spending, the deficit, and the national debt. And that means keeping a comfortable distance between lobbyists and the public trough. One tactic might be for the House to pass a continuing resolution to fund agencies at 90 percent of current spending, thus bypassing the notoriously porcine appropriations subcommittees. Another tactic is to listen to the Tea Partiers: Remember your principles, act like a citizen-legislator, do the right thing and go home.

Avoid social issues. When the Bush Republicans spent too much time on issues like the gay marriage ban and the Terri Schiavo intervention, they alienated suburban and professional women, college graduates, young people, libertarians, and independents (overlapping groups, of course). And they lost two elections. After 2008 they seem to have learned their lesson. Even in the face of several states instituting marriage equality, Republicans kept their focus squarely on overspending, health care, and big-government overreach — issues that united opponents of the Obama agenda. They shouldn’t blow it now. They should stick to the economic issues that won them the 2010 election and avoid the divisive social issues that cost them the 2006 and 2008 elections.

Respect the Constitution. The Tea Party Patriots, the largest network of the thoroughly decentralized Tea Party movement, says its core principles are “Fiscal Responsibility, Constitutionally Limited Government and Free Markets.” In the last NBC News/Wall Street Journalpoll before the election, a plurality (41 percent) of Republicans ranked a “return to the principles of the U.S. Constitution” as the top or No. 2 message they hoped to send. Much of what Congress passes these days, notably including the mandate to require individuals to purchase health insurance, exceeds the powers granted to Congress under the Constitution. As the Cato Handbook for Policymakersrecommends, Congress should pass no laws without first consulting the Constitution for proper authority and then debating that question on the floors of the House and Senate.

This is a time of great opportunity for advocates of individual freedom, free markets, and limited government. To paraphrase Hubert Humphrey’s great speech of 1948, the time has arrived for America to get out of the shadow of overweening government and to walk forthrightly into the bright sunshine of personal and economic freedom. Congress can start that process, but it will need support and pressure from lovers of liberty outside Washington.